Empowerment amendment bill tabled in Parliament

by Linda Ensor,
November 28 2012, 16:08

Linda Ensor

Empowerment amendment bill tabled in Parliament

THE Broad-Based Black Economic Empowerment Amendment Bill (BBBEE), which among other things aligns the principal act with other legislation and the codes of good practice, was tabled in Parliament on Wednesday.

The bill will establish the BBBEE Commission to monitor and evaluate the implementation of the legislation, and introduces new offences and penalties.

The amendments to the BBBEE Act define the practice of fronting, including "complex fronting", and allow for a commissioner with the power to impose penalties.

Complex fronting involves companies drawing up complicated contracts that deprive black managers of the appropriate authority for their positions.

The bill also empowers Trade and Industry Minister Rob Davies to allow organs of state and public entities to set criteria for procurement and other economic activities that exceed those set in the codes of good practice.

Those who misrepresent their BBBEE credentials could be imprisoned for 10 years, incur a fine not exceeding 10% of a company’s turnover, or both.

Some commentators have expressed confusion about the higher weighting assigned to ownership in the new codes, as they say ownership is not the primary way of addressing inequality.

They say that given the need for job creation and foreign direct investment, and because the government is aware that large employers and multinationals cannot part with their shares, such companies should be exempt from compliance with the ownership weighting. There would need to be a threshold determining the value of their existing investments in South Africa after which the exemption would kick-in.

There are also objections to the removal of the junior management category, and some businesses want the weighting of the skills development category to be increased from 20 points to 30 points.

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THE Broad-Based Black Economic Empowerment Amendment Bill (BBBEE), which among other things aligns the principal act with other legislation and the codes of good practice, was tabled in Parliament on Wednesday.

The bill will establish the BBBEE Commission to monitor and evaluate the implementation of the legislation, and introduces new offences and penalties.

The amendments to the BBBEE Act define the practice of fronting, including "complex fronting", and allow for a commissioner with the power to impose penalties.

Complex fronting involves companies drawing up complicated contracts that deprive black managers of the appropriate authority for their positions.

The bill also empowers Trade and Industry Minister Rob Davies to allow organs of state and public entities to set criteria for procurement and other economic activities that exceed those set in the codes of good practice.

Those who misrepresent their BBBEE credentials could be imprisoned for 10 years, incur a fine not exceeding 10% of a company’s turnover, or both.

Some commentators have expressed confusion about the higher weighting assigned to ownership in the new codes, as they say ownership is not the primary way of addressing inequality.

They say that given the need for job creation and foreign direct investment, and because the government is aware that large employers and multinationals cannot part with their shares, such companies should be exempt from compliance with the ownership weighting. There would need to be a threshold determining the value of their existing investments in South Africa after which the exemption would kick-in.

There are also objections to the removal of the junior management category, and some businesses want the weighting of the skills development category to be increased from 20 points to 30 points.

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